3 Funds to Cash In on an Oil Boom

Energy funds remove the risk of individual stock picks

The energy sector has been sluggish in recent years, but 2013 has given a boost to oil and gas stocks.

Geopolitical unrest in the Middle East has resulted in a “risk premium” for crude, a weaker dollar has slightly lifted commodity prices, and hope of a turnaround in European manufacturing has emerged in recent months.

As a result, we have seen a lift to a number of energy plays.

But naturally, not all oil stocks are created equal. Consider megacap Exxon Mobil (XOM), which is up a mere 2% year-to-date in 2013 vs. 18% for the S&P 500, or nationalized Chinese oil stock CNOOC (CEO), which is slightly in the red this year.

If you’re picking individual stocks, there’s a chance you might get burned. But if you’re looking for a long-term energy investment that is rising right now, consider one of these three diversified oil and gas ETFs — the Energy SPDR (XLE), iShares U.S. Energy ETF (IYE) or the the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).